RG Steel sold, details slow to emerge

August 1, 2012

SEWICKLEY, Pa. - Bankrupt RG Steel's Ohio Valley plants have been sold at auction, though early this morning union leaders still were gathering information about the changes.

While buyers were identified for RG Steel's Martins Ferry, Yorkville and Mingo Junction plants Tuesday, the sale of the company's Warren and Sparrows Point, Md., plants was delayed a week.

U.S. Bankruptcy Court Judge Kevin Carey, however, has final approval of all asset sales, and what the prospective new owners have in mind for the plants is not known.

Some published reports suggest Esmark Steel CEO Jim Bouchard, who earlier expressed interest in parts of the Wheeling Corrugating operation, purchased the Yorkville plant, though that couldn't be confirmed this morning.

Bouchard, though, previously confirmed his interest in parts of the corrugating division, which his family owned and operated company ran from 2007-08 after engineering a successful reverse hostile takeover of what was then Wheeling-Pittsburgh Steel. In 2008, Esmark sold the plants in Ohio, West Virginia and Maryland to Russia's Severstal, which, in turn, sold them to the now-bankrupt RG Steel a year ago. Bouchard since has rebuilt his steel services and distribution network and is in the process of building a $9 million, three-story, 40,000-square-foot global headquarters near Sewickley.

This morning United Steelworkers of America Local 1190 President Ernie Gambellin could say only that buyers had been identified for the local operations, adding that until he received confirmation from his district leadership, he couldn't speculate on the identity of the new owners.

Gambellin did say, however, that it was his understanding the Mingo Junction plant's buyer did not acquire any of the other properties.

"I have no confirmation yet," he said. "We have a presidents' meeting with the international today at 1 p.m. in St. Clairsville. After that, I'll know what it all means for us. As it stands now, I can't comment on what I don't know for sure."

Meanwhile, USW District 1 Director Dave McCall and staff representative Santo Santoro were not available for comment.

The sale of the Sparrows Point and Warren operations, meanwhile, reportedly was delayed because a so-called "stalking horse bidder" had been identified. A stalking-horse bid is when a bankrupt company chooses one potential buyer to tender the initial offer - essentially the benchmark bid - for the purchase of its assets, after which other potential buyers can submit competing bids. The process allows the bankrupt company to avoid being low-balled.

RG Steel previously sold the idled Steubenville plant to River Rail Development, an arm of Herman Strauss Inc., a Wheeling-based recycling business. River Rail paid $4.3 million for roughly 103 acres, plus another $10.7 million for the scrap and machinery.